Spot earnings for MR product tankers in the Atlantic plummeted 24.7% in a single day on Wednesday as their larger cousins made gains in a buoyant market in the Pacific trades.
The Baltic Exchange’s assessment for rates on the triangular route carrying oil products from Rotterdam to New York and back from Houston to Europe lost $8,945 on Wednesday, when time-charter equivalent earnings came in at just above $27,100 per day.
The drop extends a downward spiral experienced in the benchmark trade since Atlantic TCE earnings peaked at nearly $63,800 per day on 11 April.
Rates on the front-haul TC2 route, carrying products from continental Europe to the US Atlantic coast, fell nine WorldScale (WS) points to WS 205 on Wednesday, according to the Baltic Exchange.
UK tanker broker Howe Robinson Partners said two ships were fixed at WS 205 on subjects on the route during the day for 37,000-tonne cargo stems.
In its daily report, the firm said it does not expect the downward pressure to ease in the near future.
“The tonnage list is showing a gradual thinning-out of the prompt ships and not a huge number in behind that owners are pushing. This appears to be a combination of owners hiding ships as well as a number of uncertain itineraries on the ships coming into the continent basket laden,” the broker said.
“But with only a couple of uncovered stems and a healthy tonnage list for the fixing window being worked, it doesn’t appear that the downward pressure will ease up anytime soon.”
The more volatile backhaul route from the US Gulf back to Europe plummeted 41 points to WS 227, according to Baltic Exchange data.
LR1 product tankers on the benchmark route from the Middle East jumped more than 15% in one day as rising activity levels faced the prospect of a tightening list of available ships.
Howe Robinson said the spot rates for the TC5 route from the Gulf to Japan jumped to WorldScale 170, up from WS 165 a day earlier.
For a non-eco LR1, that translates to time-charter equivalent (TCE) earnings of about $12,000per day, up from just under $10,500 a day earlier.
For eco tankers of the same size, TCE rates jumped 8.9% on Wednesday to reach $18,383 per day.
Bounce back
The jump added to a rebound for LR1s after rates sank to a low of WS 155 this month after peaking at nearly WS 208 in March, according to data from the Baltic Exchange.
On Wednesday, four fresh charges emerged in the market, adding to activity levels that Howe Robinson described as buoyant.
The 12 open vessels available for cargo loading up to 30 April represent a well-balanced market for the next 10-day chartering window known as a decade, but the UK shipbroker expects that to change.
“The list for the first decade of May looks incredibly tight, only adding six open spec ships with charterers,” Howe Robinson said in its daily note to clients.
“In the Far East, the list is the shortest we have seen in recent memory and any available tonnage north of Singapore is expected to be taken out with local demand.”
If Chinese oil product exports maintain at their current pace, it could pull ships from South East Asia and Australia, adding to pressure on the Middle East market in May, the broker said.
Howe Robinson said it expects a further strengthening of rates, though that could push charterers to upsize cargo stems.
Larger LR2s on the TC1, which tracks the same voyage from the Middle East to Japan, saw more modest improvements on Wednesday.
Rates remained stable at WS140 but that translated into TCE earnings of just under $14,300 per day for a non-eco ship, which was a 2.8% gain compared to the prior day.
Eco LR2s would earn $19,200 at that rate, a 1.7% improvement from Tuesday’s levels.
The rising market for larger product tankers was not enough, however, to make up for the plummeting MRs. The Baltic Clean Tanker Index, the exchange’s snapshot of product tanker soot rates, inched downward by four points to 1,048 on Wednesday.
